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April 19, 2009

A Corporate Officer may be Held Liable as an “Employer” under the Fair Labor Standards Act

In Zegarra v. Marco Polo, Inc., 2009 WL 143428 (E.D. Va. 2009), Plaintiff Vivian Zegarra (“Plaintiff”) filed suit against Defendants for minimum wage and overtime hours violations of the Fair Labor Standards Act (the “FLSA”), 29 U.S.C. § 201 et seq. More specifically, Defendants, based in the Northern Virginia area, employed Plaintiff from late March 2007 until late May 2008. During the time period relevant to the Complaint, Mr. Pestana owned, and served as the principal officer of, MP and MP Caterers (collectively, the “Corporate Defendants”). He exercised significant control over the day-to-day operations at the Corporate Defendants, including the power to hire, fire, and set wages and compensation for employees. Plaintiff's Complaint contained two counts: Count I, for violation of FLSA minimum wage and overtime requirements, against Defendants, and Count II, for breach of contract, against the Corporate Defendants. Under the FLSA, Plaintiff sought to recover unpaid compensation, liquidated damages, interest, and attorney's fees and expenses. Under her breach of contract claim, pled in the alternative, Plaintiff asked for damages in the amount of unpaid compensation. Defendants moved to dismiss the claims against defendants MP Catering and Pestana.

Defendants' motion to dismiss, based on the fact that Pestana acted through MP, argued that individuals in Pestana's position cannot be liable as “employer[s]” under the FLSA as a matter of law. The Court disagreed, holding that individuals may be held liable as “employers” under the FLSA. The FLSA defines an “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d). The definition of “employer” in the Act is “expansive,” and an employee may have more than one “employer.” Falk v. Brennan, 414 U.S. 190, 195 (1973). According to the Court, whether an individual is an “employer” under the Act turns on the facts and circumstances of each case. The majority rule allows an individual corporate officer to be an “employer” under the FLSA-subject to liability in his individual capacity-if he acts as “a supervisor [with] sufficient control over the conditions and terms of the plaintiff's employment.” Kilvitis v. County of Luzerne, 52 F.Supp.2d 403, 413 (M.D.Pa.1999) (citing Dole v. Haulaway, Inc., 723 F.Supp.2d 274, 286 (D.N.J.1989)); see Brock v. Hamad, 867 F.2d 804, 808 n. 6 (4th Cir.1989); see also Dole v. Elliott Travel, 924 F.2d 962, 965 (6th Cir.1991); Cubias v. Casa Furniture and Bedding, LLC, 2007 WL 150973, at *2-3 (E.D.Va. Jan. 16, 2007). “The overwhelming weight of authority is that a corporate officer with operational control of a corporation's covered enterprise is an employer along with the corporation, jointly and severally liable under the FLSA for unpaid wages.” Donovan v. Agnew, 712 F.2d 1509, 1511 (1st Cir.1983) (collecting cases). The Complaint alleged that Pestana exercised control over the operations of the Corporate Defendants, could hire and fire employees, had the power to control the actions of employees, and set their wages and compensation. The Court concluded by ruling that Plaintiff stated a claim against Pestana in his individual capacity by alleging that he is an “employer” under the FLSA.